McKim Company is considering acquiring a manufacturing plant. The purchase price is $1,000,000. The owners believe the plant will generate net cash inflows of $314,000 annually. It will have to be replaced in 6 years. Use the payback method to determine whether McKim Company should purchase this plant. Round to one decimal place. Select the formula, then enter the amounts to calculate the payback period for the plant. (Round payback to one decimal place, X.X.) = Payback years
McKim Company is considering acquiring a manufacturing plant. The purchase price is $1,000,000. The owners believe the plant will generate net cash inflows of $314,000 annually. It will have to be replaced in 6 years. Use the payback method to determine whether McKim Company should purchase this plant. Round to one decimal place. Select the formula, then enter the amounts to calculate the payback period for the plant. (Round payback to one decimal place, X.X.) = Payback years
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
Question
![McKim Company is considering acquiring a manufacturing plant. The purchase price is $1,000,000. The owners believe the plant
will generate net cash inflows of $314,000 annually. It will have to be replaced in 6 years. Use the payback method to determine
whether McKim Company should purchase this plant. Round to one decimal place.
Select the formula, then enter the amounts to calculate the payback period for the plant. (Round payback to one decimal place,
X.X.)
=
Payback
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cfdfc38-91b0-4508-9ea5-ec5503372db8%2Fde7f1abb-46d3-432d-8b96-66a1f9e17470%2Fo1ghtxe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:McKim Company is considering acquiring a manufacturing plant. The purchase price is $1,000,000. The owners believe the plant
will generate net cash inflows of $314,000 annually. It will have to be replaced in 6 years. Use the payback method to determine
whether McKim Company should purchase this plant. Round to one decimal place.
Select the formula, then enter the amounts to calculate the payback period for the plant. (Round payback to one decimal place,
X.X.)
=
Payback
years
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